Starwood Sues Hilton Over Luxury Chain

Starwood Hotels (HOT Quote) filed a lawsuit against Hilton Hotels alleging that two Hilton executives stole confidential Starwood information that was used to develop a luxury hotel chain.

Starwood's suit, filed Thursday in Federal District Court in New York, alleges that Hilton executives Ross Klein and Amar Lalvani "stole massive amounts of proprietary and highly confidential Starwood information which was used to expedite Hilton's entry into the lifestyle hotel market, reposition its luxury brands and substantially reduce its costs and risks of doing so."

Klein and Lalvani served as executives at Starwood's luxury-brand division, and were recruited by Hilton in June after it was acquired by Blackstone Group(BX Quote).

The lawsuit alleges that Klein and Lalvani stole more than 100,000 electronic files before and after they joined Hilton, Starwood said in a press release Thursday. Starwood also alleges that among the stolen materials was confidential information about Starwood's W hotel brand which Hilton used in the development of its Denizen brand.

Starwood is seeking preliminary and permanent injunctive relief and compensatory and punitive damages from Hilton, and Klein and Lalvani. The lawsuit also seeks a court order enjoining Hilton from using or benefiting from Starwood's confidential information. The suit could hurt Hilton's plans for the Denizen brand.

"Hilton Hotels Corporation is aware that a lawsuit has been filed, but we have not yet seen a copy. We will respond appropriately in due course," a Hilton spokeswoman, Ellen Gonda, said in an e-mail message to the New York Times.

The Wall Street Journal reports Hilton saying "we fully intend to move forward on the development of our newest brand, Denizen Hotels."